Real yield / real return (Realrendite)
Real yield is the return on money after subtracting inflation — what it actually gains in purchasing power, not the percentage printed on a bank or broker statement. An account paying an illustrative 4% nominal return, in a year with 2% inflation, delivers a real yield of roughly 2%. Half the advertised growth only offset rising prices.
Why it matters
Every advertised rate in Germany — Tagesgeld (instant-access savings) interest, Festgeld (fixed-term deposit) rates, bond coupons, fund returns — is nominal by default. It says nothing about purchasing power on its own. Real yield combines two prerequisite ideas, inflation and the nominal-vs-real distinction, into a single number that answers the question that actually matters: is money growing faster than prices, or just keeping up appearances while quietly losing ground?
Real yield is also the input a later concept, the safe withdrawal rate, depends on: how much a portfolio can sustainably pay out each year is a question about real, not nominal, growth.
Worked examples
1. Quick approximation. €10,000 sits in an account paying an illustrative 3.0% nominal rate for one year, while inflation runs at an illustrative 2.6%. The fast approximation subtracts one from the other: 3.0% - 2.6% = 0.4% real yield. The balance grows to €10,300 in euro terms, but with prices about 2.6% higher, that €10,300 has the purchasing power of roughly €10,040 in today's money — a real gain of about €40, not €300.
2. Comparing options. The subtraction shortcut breaks down at higher rates, because prices compound too. The precise formula is (1 + nominal) / (1 + inflation) - 1. Applied to three illustrative products against the same illustrative 2.6% inflation:
| Product (illustrative) | Nominal rate | Approx. real yield (nominal − inflation) | Exact real yield (1+nominal)/(1+inflation)-1 |
|---|---|---|---|
| Tagesgeld A | 3.0% | 0.4% | 0.39% |
| Tagesgeld B | 1.5% | −1.1% | −1.07% |
| Festgeld C (12 months) | 6.0% | 3.4% | 3.31% |
The gap between approximation and exact widens as the nominal rate climbs — Festgeld C's approximation (3.4%) overstates the exact figure (3.31%) by nearly a tenth of a point. Tagesgeld B illustrates the case that surprises savers most: the balance still grows in euros every month, but the real yield is negative, so each euro buys less than it did a year earlier.
Check yourself
A savings account pays a 6% nominal interest rate. Inflation is 2%. Using the quick approximation (nominal minus inflation), what is the real yield, in percent?
An account pays 2% nominal interest for the year, while inflation runs at 5%. Which statement is correct?
Which of the following statements about calculating real yield are true? Select all that apply.
Using the precise formula (1 + nominal) / (1 + inflation) − 1, what is the real yield in percent when the nominal rate is 10% and inflation is 5%?